Taobao Village – A Tree Is Only As Strong As Its Roots
“A dream doesn’t become reality through magic; it takes sweat, determination and hard work”
– Colin Powell
The first thing that comes to mind when you hear ‘Taobao Village’ is, how does Alibaba do ecommerce in a village. Where does a village fit in to the big ecommerce ecosystem of China? My perspective on ‘rural’ were soon to be challenged. Our arrival at Bainiu did not feel like arriving at a village. Paved road, concrete houses, BMW’s and Audi’s! I wasn’t able to understand where we were, I thought we were going for a visit to a village!
We were taken on a tour of the village’s ‘Taobao Village’ office. We were detailed through the journey of Bainiu’s growth as a ‘Taobao Village’.
It is a story worth listening to. How a coordinated initiative like ‘Taobao Village’ can help turn the tables on urban migration. How people now prefer to live in their village and earn their living as an entrepreneur. For when the option didn’t exist migration was the only way up the economic ladder. Bainiu villagers don’t grow the walnuts or red dates that they sell on on Taobao. They source them from the nearby villages and process them further before selling them directly to the consumer through Taobao. The beauty of this model is each participant in the value chain get his ‘fair share’ of the price. This is a true representation of the Ali proverb that,
“Sharing does not decrease value but increases it”
From here we went to meet the village head who too shared his story of urban migration to Hangzhou but came back to work in the village. He now enjoys a much valued ‘stress free’ life away from urban trappings. However, his enthusiasm to further develop the village ecommerce ecosystem and help create more village entrepreneurs who can drive their BMW’s was commendable. Through our discussion he detailed how government policies supporting entrepreneurship development through favourable credit terms and Alibaba’s push for ‘Taobao Villages’ has helped lift the village to a new level of economic development. Villagers now don’t envy the folks living in the cities, the tables have turned. We bid goodbye to our hosts at Bainiu to continue on our journey of rural exploration.
Bainiu Village Head with AGLA
We were going to visit another ‘Taobao Village’ which is called Bei Shan. Having seen Bainiu we were expecting to see another modern village which produced and sold something on Taobao we just didn’t know what. Well when we reached the village it definetly felt like a ‘Taobao Village’. Even Jack Ma was there!
We got introduced to the village head and understood that this is also a thriving ‘Taobao Village’ that is successfully providing employment to a lot of villagers who now prefer to live in the villages than migrate to nearby cities. It’s very heartening to see Alibaba creating such direct and positive impact in rural China. We’ve picked up what maybe governments do in other countries and shown the way that successful business models can be built out of such efforts. While the euphoria of being associated with an organization that strives to make an effort to change things was settling in, I wasn’t prepared for what came next. Bei Shan seemed more of village with houses set amongst the fields yet it manufactures plastics sheets of varying thickness that are used in our households from table covers to packaging material. They even manufacture grilling equipment. I’m standing in the middle of a village with vegetable fields behind me and villagers working on a computer fulfilling grilling equipment orders and printing shipment labels. I was pinching myself hard, where am I? Is this really a village?
But the reach and impact of ‘Taobao Villages’ didn’t stop there. We were told that we’re going to be visiting another place close by which is associated with this village that is traditionally known for baking bread. Welcome to Bei Shan Wolf, our homegrown camping and mountaineering equipment manufacturer.
The pace of innovation and a keen eye for market opportunities makes these rural entrepreneurs stand out. What started out as a thought of changing occupation from baking bread to manufacturing sleeping bags has now become the top selling sleeping bag brand on Taobao and has helped Bei Shan Wolves morph into a full scale mountaineering equipment manufacturer. They take their work seriously and continue to strive to bring new products to the markets. They make sure that all of their products are tested in the outdoors to get as close to real world performance as possible. They share a lot of characteristics Bainiu but the differences start becoming obvious pretty soon. BS Wolf strives to grow like any other fast growing company does anywhere on the globe. They keep their focus on product innovation, retaining talent and building a consumer business in a category that didn’t exist in China 5 years ago. Sounds pretty much like the challenges any other start up faces in London, New York or San Francisco. But the key difference here is we are not in any of those cities with their ecosystems or funding apparatuses. We are in Bei Shan about 100 kilometers away from a big city with no VC funding or tech support, yet they’re still living their dream.
AGLA @ Bei Shan
Yiwu – The World Market
Moving from ‘Taobao Villages’ into the cradle of B2B was a transition we were not aware of. From Bei Shan we were sent on to a journey in to the heart of business, Yiwu, a city of about 1.2 million people in central Zhejiang province, China. The city is famous for its small commodity trade and vibrant market and is a regional tourist destination. Yiwu’s China Small-Commodity Market has for 6 consecutive years topped China’s 100 top open markets and was for successive years listed as “China’s Civilized Open Market”. There has been a significant increase in Arab traders since 9/11, as Middle East businessmen found it difficult to travel to the United States due to visa restrictions. We were in the mecca of SME trading.
It was difficult to contain my bewilderment upon hearing the scale at which Yiwu operates. Trade centers of the size of 10 football fields and only 100,000 stalls in them, no wonder they call them districts and have only 5 of them. Traveling within the city it’s hard to miss the sign boards in Arabic, Indian restaurants and massive marketplaces. This is like coming back to the roots of globalization.
Our tasks for this brief visit was cut out. We were to assist our Alibaba associates on business calls and help recruit sellers, or at least convince them to give our B2B portal a try. With the task at hand we started our morning with the customary morning meeting at 8:30 AM! Yes we start early. We discuss what we need to accomplish for the day and share our plans with each other, team work is the key to success. We break into groups and each get on with the task of assisting our colleagues. We are a part of the ‘Iron Army’ as they are fondly called at Alibaba. The bunch of fighters who go out and recruit sellers for our B2B portal. Things were getting serious. Some existing sellers wanted our help in understanding what to do with their accounts. How do they increase sales?
AGLA’ers Interacting with Shop Owners
We were hard pressed for answers but went about explaining to them how our portals work, obviously with some help from the ‘Iron Soldiers’ accompanying us. We were looking at real world problems of customer relationship management first hand. Even though it was the last day of the month for the ‘Iron Army’ and the pressure was on them to reach their targets they were patient with our questions and took interest in explaining things to us.
We were given a free hand to interact with sellers to know how they did business and what their plans were for eCommerce. Opinions were divided as it usually is but the opportunity to speak to a small business owner on his/her business priorities was unique.
We finished our work at the Yiwu’s districts by lunch and headed back to the office to meet a surprise guest. We were simply told that the guest is a customer of ours who had successfully grown his business through our B2B. But when we met Dany we didn’t expect to see a 25 year old who runs a large business with millions of RMB in revenue and did that through Alibaba. Dany is a first generation entrepreneur and has built a successful business manufacturing and selling bags and bandanas through our B2B. But success didn’t come easy. The struggle started after he had worked in Dubai for a sourcing firm and decided to start his own business. With his exposure in business trading he headed out for Kenya, yes of all places Kenya. When you ask him why he simply says that when you don’t have a choice you make every opportunity work for you. He started small by collecting buyer requirements and helping fulfill them through traders in China and continued to grow his business from there. Soon he was in Yiwu managing a large business of trade sourcing on his own.
But he knew that this was not enough. He had to look at other avenues to expand business. When he first came across our B2B portal he saw an opportunity to sell to the world and started out as a trader. He expanded his product portfolio to sell more to the world. Along the way he saw an opportunity to acquire his own factory and take control of the entire supply chain. He began manufacturing bags and bandanas based on customer requests and grew his business through our B2B portal. But when you ask him what his biggest challenge has been through all this, Dany responds in true entrepreneurial style – “There are no challenges only opportunities!”
Meeting with Dany boosted our enthusiasm. We were really having a positive impact on people’s lives by helping SMEs become successful and do business globally. Our next and final stop of the journey was a panel discussion with Aliren. Whenever you speak to Aliren their passion speaks to you from their words.
They all believe in and strive for a common goal. How they do it is the key. We heard it straight from the horse’s mouth here. The way to achieve a healthy work life balance is to follow an army culture at work or just follow the age old wisdom of Jack Ma,
“Be happy at work and serious in life”
The learnings that I took away from this past week on the road have been eye opening. Reverse migration of villagers back from the cities goes a long way to show for the impact of the ‘Taobao Village’ initiative. Government support alone couldn’t have created the impact. If the platform wasn’t available for the villages to sell online then the villagers would end up being factory workers in a village. ‘Taobao Village’ has given them the opportunity to sell directly to the consumer, removing middlemen and hence gave them the opportunity to share the economic gains.
‘Taobao Village’ is a unique program that takes the well-known advantage of low cost inputs and marries them with the advantage of selling directly to your consumer. Without ‘Taobao Village’ this advantage could have easily been turned into another way of doing low cost manufacturing for export. Thanks to ‘Taobao Village’ these rural entrepreneurs are able to realize the gains of selling to their end consumer.
The China perspective of innovation is very different from what we see in the rest of the world. The biggest problem is that the owner of the old manufacturing and technology IP don’t possess the ability to manufacture anything by themselves. They are dependent on countries like China to produce for them. China plays that role very efficiently, but when they need to sell locally in China these manufacturers see the disadvantage of using the IP because that makes the products expensive. The Chinese manufacturer senses the opportunity to use his manufacturing prowess to produce and sell domestically and create his own brand. This is a reality we have to wake up to. While China innovates in its own right it also takes up the task of pushing the boundaries of ‘old’ IP to localize it to China and make it cost effective.
Manas Roy is a passionate rationalist who believes that every act has merit in it, all you need is to be flexible enough and willing to adjust your perspectives. He is currently exploring the multi-faceted platform world of Alibaba and hopes to take his learnings to help grow Alibaba’s presence in global markets and serve consumers around the world